India signs Joint Crediting Mechanism with Japan under Article 6 of the Paris Agreement, operationalising carbon markets

India Steps into Global Carbon Markets: A New Era in Climate Action

Q: What is Article 6 of the Paris Agreement and how does it facilitate international carbon markets?

Article 6 of the Paris Agreement establishes the framework for international cooperation on carbon markets and climate action. It provides mechanisms for countries to trade emissions reductions, known as Internationally Transferred Mitigation Outcomes (ITMOs) , while ensuring robust accounting to avoid double counting. Article 6.2 allows bilateral or multilateral cooperation, whereas Article 6.4 introduces a centralized Paris Agreement Crediting Mechanism to replace the Clean Development Mechanism (CDM). The operationalization of Article 6 at COP29 marked a milestone, with 89 cooperation arrangements across 58 Parties, reflecting growing momentum for carbon market collaborations. Through these mechanisms, countries can mobilize finance, transfer advanced technologies, and accelerate low-carbon development in alignment with their nationally determined contributions (NDCs). For India, this provides a platform to integrate climate finance, technology access, and international partnerships into domestic climate strategies.

Q: Why is India's participation in Article 6 mechanisms significant for the country's climate and economic goals?

India's participation in Article 6 mechanisms, such as the Joint Crediting Mechanism (JCM) Second, engagement under Article 6 enhances bilateral and multilateral cooperation, strengthening diplomatic ties and positioning India as a leader in climate governance. By leveraging carbon markets, India can channel investments into renewable energy, energy efficiency, and emerging technologies like green hydrogen, bio-gas, and sustainable aviation fuel. Such collaborations also create opportunities for industrial innovation, job creation, and low-carbon industrial transformation, aligning climate action with long-term development priorities.

Q: How does India operationalize its carbon market activities under Article 6 to achieve low-carbon growth?

India has operationalized its carbon market activities under Article 6 through a combination of strategic policy and project-level actions. The government has appointed a Designated National Authority to oversee A6 projects, identify eligible activities, and establish rules for issuance of Letters of Authorization and corresponding adjustments. Currently, India has selected 13 high-impact activities across sectors such as renewable energy with storage, solar thermal, offshore wind, green hydrogen, bio-gas, fuel cell mobility, energy efficiency, and sustainable aviation fuel. These activities are designed to shift the country’s emissions profile while aligning with economic growth priorities. For example, green hydrogen in steelmaking can drastically reduce emissions intensity, while offshore wind and energy storage diversify the energy mix. By integrating these projects with international crediting mechanisms, India can generate carbon credits, attract climate finance, and accelerate deployment of cutting-edge technologies, ensuring that climate action supports sustainable industrial and technological transformation.

Q: What are the main challenges India faces in implementing Article 6 projects effectively?

Implementing Article 6 projects in India faces several challenges. First, the regulatory and procedural framework needs strengthening. While a Designated National Authority exists, detailed rules for Letters of Authorization, corresponding adjustments, and legal certainty are still evolving. This can slow down project approvals and limit participation. Second, project clearances are often delayed due to multiple stakeholders and land-use complexities. Research by CEEW indicates that voluntary carbon projects in India take over 1,600 days to register compared to less than 400 days elsewhere in Asia, highlighting the need for a single-window clearance system. Third, the domestic carbon removals market is nascent. Activities like Biochar or Enhanced Rock Weathering require robust standards, monitoring, and verification mechanisms to ensure high-quality carbon credits. Finally, mobilizing finance and aligning projects with both climate and developmental goals requires coordination between international partners, private investors, and national institutions, necessitating clear policy guidance and institutional capacity.

Q: Can you provide an example of how India’s first Joint Crediting Mechanism project works in practice?

India’s first Joint Crediting Mechanism (JCM) project with Japan demonstrates how bilateral cooperation can reduce emissions while attracting finance and technology. For instance, a renewable energy project, such as a solar thermal plant with energy storage, can generate certified emissions reductions recognized under Article 6.2. These reductions are quantified, verified, and converted into carbon credits, which can then be transferred to Japan as part of their international mitigation commitments. The project simultaneously benefits India by providing access to Japanese technology, capital for deployment, and capacity-building for local stakeholders. It also strengthens governance and monitoring systems, ensuring rigorous reporting. This model illustrates the dual advantage of international cooperation: enabling climate finance and technology transfer while contributing to India’s domestic decarbonization goals.

Q: Consider a scenario where India scales up Article 6 projects across multiple sectors. What could be the economic and environmental implications?

If India scales up Article 6 projects across renewable energy, green hydrogen, bio-gas, and energy efficiency, the country could achieve significant economic and environmental gains. Environmentally, emissions intensity would decrease, contributing to India’s NDC targets and long-term decarbonization. Hard-to-abate sectors like steel and cement could adopt technologies like carbon capture and green hydrogen, drastically lowering their carbon footprint. Economically, large-scale deployment attracts climate finance, generates jobs in emerging sectors, and stimulates domestic industrial innovation. For example, investment in offshore wind or energy storage can catalyze local manufacturing, research, and infrastructure development. Additionally, successful projects strengthen India’s position in the global carbon market, enabling export of high-quality carbon credits. Challenges remain, such as regulatory capacity and coordination among stakeholders, but with strategic planning, scaled Article 6 participation can accelerate India’s low-carbon growth trajectory and global climate leadership.

Leveraging Article 6 to Unlock Technology, Finance, and Low-Carbon Growth

Gopi

January 13, 2026 4 mins read

Attribution

Original content sources and authors

Author Aparna Sharma

Source The Hindu

Syllabus classification

How this article maps to GS papers

Main syllabus

GS3Environment & Bio-diversity

Quick Q&A

What is Article 6 of the Paris Agreement and how does it facilitate international carbon markets?

Article 6 of the Paris Agreement establishes the framework for international cooperation on carbon markets and climate action. It provides mechanisms for countries to trade emissions reductions, known as Internationally Transferred Mitigation Outcomes (ITMOs), while ensuring robust accounting to avoid double counting. Article 6.2 allows bilateral or multilateral cooperation, whereas Article 6.4 introduces a centralized Paris Agreement Crediting Mechanism to replace the Clean Development Mechanism (CDM). The operationalization of Article 6 at COP29 marked a milestone, with 89 cooperation arrangements across 58 Parties, reflecting growing momentum for carbon market collaborations. Through these mechanisms, countries can mobilize finance, transfer advanced technologies, and accelerate low-carbon development in alignment with their nationally determined contributions (NDCs). For India, this provides a platform to integrate climate finance, technology access, and international partnerships into domestic climate strategies.

Why is India's participation in Article 6 mechanisms significant for the country's climate and economic goals?

India's participation in Article 6 mechanisms, such as the Joint Crediting Mechanism (JCM) Second, engagement under Article 6 enhances bilateral and multilateral cooperation, strengthening diplomatic ties and positioning India as a leader in climate governance. By leveraging carbon markets, India can channel investments into renewable energy, energy efficiency, and emerging technologies like green hydrogen, bio-gas, and sustainable aviation fuel. Such collaborations also create opportunities for industrial innovation, job creation, and low-carbon industrial transformation, aligning climate action with long-term development priorities.

How does India operationalize its carbon market activities under Article 6 to achieve low-carbon growth?

India has operationalized its carbon market activities under Article 6 through a combination of strategic policy and project-level actions. The government has appointed a Designated National Authority to oversee A6 projects, identify eligible activities, and establish rules for issuance of Letters of Authorization and corresponding adjustments. Currently, India has selected 13 high-impact activities across sectors such as renewable energy with storage, solar thermal, offshore wind, green hydrogen, bio-gas, fuel cell mobility, energy efficiency, and sustainable aviation fuel. These activities are designed to shift the country’s emissions profile while aligning with economic growth priorities. For example, green hydrogen in steelmaking can drastically reduce emissions intensity, while offshore wind and energy storage diversify the energy mix. By integrating these projects with international crediting mechanisms, India can generate carbon credits, attract climate finance, and accelerate deployment of cutting-edge technologies, ensuring that climate action supports sustainable industrial and technological transformation.

What are the main challenges India faces in implementing Article 6 projects effectively?

Implementing Article 6 projects in India faces several challenges. First, the regulatory and procedural framework needs strengthening. While a Designated National Authority exists, detailed rules for Letters of Authorization, corresponding adjustments, and legal certainty are still evolving. This can slow down project approvals and limit participation. Second, project clearances are often delayed due to multiple stakeholders and land-use complexities. Research by CEEW indicates that voluntary carbon projects in India take over 1,600 days to register compared to less than 400 days elsewhere in Asia, highlighting the need for a single-window clearance system. Third, the domestic carbon removals market is nascent. Activities like Biochar or Enhanced Rock Weathering require robust standards, monitoring, and verification mechanisms to ensure high-quality carbon credits. Finally, mobilizing finance and aligning projects with both climate and developmental goals requires coordination between international partners, private investors, and national institutions, necessitating clear policy guidance and institutional capacity.

Critically evaluate the potential benefits and limitations of India's engagement in international carbon markets under Article 6.

India’s engagement in international carbon markets under Article 6 offers multiple benefits. It provides access to climate finance and advanced technologies, accelerates low-carbon industrial development, and strengthens international cooperation. By participating in carbon markets, India can monetize emissions reductions through ITMOs, enabling investment in renewable energy, energy efficiency, and emerging technologies like green hydrogen and bio-gas. However, limitations exist. The success of carbon market participation depends on robust domestic regulatory frameworks, transparent accounting, and credible monitoring, reporting, and verification (MRV) systems. Delays in project clearances, fragmented domestic infrastructure, and uncertainties around market pricing can impede outcomes. Furthermore, over-reliance on carbon credits without parallel domestic decarbonization measures may slow structural emissions reductions. Thus, India must balance the financial and technological opportunities of Article 6 with strong domestic policy, governance, and environmental integrity to maximize long-term benefits.

Can you provide an example of how India’s first Joint Crediting Mechanism project works in practice?

India’s first Joint Crediting Mechanism (JCM) project with Japan demonstrates how bilateral cooperation can reduce emissions while attracting finance and technology. For instance, a renewable energy project, such as a solar thermal plant with energy storage, can generate certified emissions reductions recognized under Article 6.2. These reductions are quantified, verified, and converted into carbon credits, which can then be transferred to Japan as part of their international mitigation commitments. The project simultaneously benefits India by providing access to Japanese technology, capital for deployment, and capacity-building for local stakeholders. It also strengthens governance and monitoring systems, ensuring rigorous reporting. This model illustrates the dual advantage of international cooperation: enabling climate finance and technology transfer while contributing to India’s domestic decarbonization goals.

Consider a scenario where India scales up Article 6 projects across multiple sectors. What could be the economic and environmental implications?

If India scales up Article 6 projects across renewable energy, green hydrogen, bio-gas, and energy efficiency, the country could achieve significant economic and environmental gains. Environmentally, emissions intensity would decrease, contributing to India’s NDC targets and long-term decarbonization. Hard-to-abate sectors like steel and cement could adopt technologies like carbon capture and green hydrogen, drastically lowering their carbon footprint. Economically, large-scale deployment attracts climate finance, generates jobs in emerging sectors, and stimulates domestic industrial innovation. For example, investment in offshore wind or energy storage can catalyze local manufacturing, research, and infrastructure development. Additionally, successful projects strengthen India’s position in the global carbon market, enabling export of high-quality carbon credits. Challenges remain, such as regulatory capacity and coordination among stakeholders, but with strategic planning, scaled Article 6 participation can accelerate India’s low-carbon growth trajectory and global climate leadership.

Practice questions

1 question for mains preparation

Discuss the potential of carbon markets, ITMOs, and climate finance to drive socio-economic transformation in India. To what extent can bilateral and multilateral partnerships facilitate technology transfer, carbon removals, and a low-carbon energy transition?

10 marks · 150 words · 8 mins

India Steps into Global Carbon Markets: A New Era in Climate Action

India and Article 6 of the Paris Agreement: Carbon Markets and Low-Carbon Transition

1. Global Context: Article 6 and Carbon Markets

2. India’s Entry into Carbon Markets

3. Strategic Priority Sectors

4. Institutional and Governance Framework

5. Market Development and South–South Cooperation

6. Implications and Policy Way Forward

7. Conclusion

Attribution

Syllabus classification

Quick Q&A

Practice questions

Discuss the potential of carbon markets, ITMOs, and climate finance to drive socio-economic transformation in India. To what extent can bilateral and multilateral partnerships facilitate technology transfer, carbon removals, and a low-carbon energy transition?